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Energy analysts have voiced deep skepticism regarding optimistic predictions that American energy majors will rapidly pump billions of dollars to rebuild the country's dilapidated energy sector.

Demand for Absolute Assurances

Absent an solid promise of full reimbursement from the US federal government, analysts expect global energy giants to act with great care.

“It would be too early to comment on any potential investments,” a representative commented this weekend.

The aggressive schedule of less than 18 months has been publicly outlined. However, realistic assessments suggest a longer timeline.

A More Realistic Timeline

“It’s probably going to take three years for any significant production bounce,” noted an industry expert.

He suggested energy firms would likely spend:

• Initial phase: Securing new operating agreements.
• Following phase: Commencing overhaul of infrastructure.
• Year three: Being able to significantly ramp up output.

This suggests an rise of around 500,000 barrels per day possibly by the end of the decade.

Desire Versus Willingness for Risk

Experts make a critical difference between multinationals’ interest and their willingness to spend significantly.

“I believe their curiosity is an high score, on a scale of one to 10. However, their appetite is a four or five, because there is a lack of certainty yet.”

Experienced observers in the region share this sentiment. The thinking is that firms will politically talk up the opportunity while actually acting with extreme caution.

The Vast Cost

The monetary investment would be vast. Research projections suggest that adding between 500,000 and a million bpd would require over $10 billion in capital spending over two to three years.

But, restoring output to historical levels of around 2.5 million barrels per day could require a massive $80 billion to $90 billion over six or seven years.

The Unanswered Issue of Federal Guarantees

The idea of energy companies being reimbursed by the federal government has been repeatedly raised. However, formal assurances on this proposal have not yet been forthcoming.

This lack of a solid plan is the primary impediment behind the sector's reluctance. Companies seek guarantees against sovereign risk and the possibility that a different president could renege on any deal.

“It is essential to be insured against political change, that we’ve experienced in Venezuela before.”

Ultimately, while rhetorical confidence runs high, the practical risks suggest a road of measured steps for any major financial commitment in the country's oil sector.